DLA Balanced Scorecard

Janet FooteSenior Strategic Planner

16 December 2004

• Defense Logistics Agency’s Scorecard

• Defense Information Systems Agency’s Scorecard

• Collaboration Benefits We Saw

• Questions/Dialogue With You

• Goal: Collaboration across Government for Performance Results

Today’s Session

Discussion Framework

• Who/What is DLA?• Forces Driving Change • Strategic Management System (BSC is Only One Piece)• Alignment to DoD Risk Framework • Results• Things We Learned & Share• Value From DISA

4

Scope of Business

• 45,000 Requisitions/Day• 8,200 Contracts/Day• #54 Fortune 500 – Above Northrop Grumman• #2 in Top 50 Distribution Warehouses• 24 Distribution Depots• 5.2 Million Items • 24.7M Annual Receipts and Issues • 1411 Weapon Systems Supported• 147.7M Barrels Fuel Sold (FY 03)• $12.5B Annual Reutilizations/Disposals

• 21,490 Civilians• 524 Active Duty Military• 637 Reserve Military• Located in 48 States/28 Countries

Foreign Military Sales

• Sales: $719M • Shipments: 580K• Supporting 124 Nations

FY 02 Sales/Services: $21.5BFY 03 Sales/Services: $25.0B FY 04 Projection: $28.9B

• Land/Maritime/Missiles: $ 2.7B• Aviation: $ 3.3B• Troop Support: $10.2B• Energy: $ 5.2B• Distribution: $ 2.2B • Other: $ 1.4B

People

The DLA Enterprise

• Basic Business Model – from traditional wholesaler to customer & supplier partner

• Out-sourcing

• BRAC

• Technology (PCs, Communication, etc.)

•One Enterprise – from holding company to one, tightly integrated provider

Forces Driving Change

• One Enterprise – OSD, Joint Staff and Combatant Commanders demand seamless, agile and effective logistics support

• President’s Management Agenda

• Financial Imperatives

• Market Share

• Competition

• Complexity, best business practice, …

Forces Driving Change

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Need to:• Focus on core enterprise goals• Balance objectives• Allocate resources at the enterprise level • Focus on performance drivers• Balance quantitative & qualitative measures • Establish individual and collective

accountability

Forces Driving Change

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CustomerBe “Customer

Driven”

InternalProcessAchieve and Sustain Market Dominance through Performance

Learning and Growth

Maintain and Support a

Customer-Focused Logistics Team

FinancialResource our Operational Strategies

as a Trusted Financial Steward

Delivering—Customer Focus

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Scorecard Example

J-89 (Soltis)28!733%4/12125N/A123123Q

Number of POAMscompleted against plan to address auditabilitydeficiencies

Promote confidence in DLA'sfinancial stewardship

J-8 (Poleo)<15.5%

11.8%

11.8%

19%

18.8%

23.6%

21.5%A

Cost Recovery Rate (CRR)

Minimize Total Supply Chain costs

Strategic MeasureStrategies

Strategy OwnerFY04 Target

FY04 YTD

Results

Current Period

FY03 Actua

l

FY02 Actual

FY01 ActualBaselineFreq

FY05 Target

10

15.0%

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Best Value Solutions For America’s Warfighters

Customer

Internal

IP-4 Design And Implement A Best Value

Enterprise IT Environment

DLA will be “customer driven”

Learning and Growth

Financial

C-2

Negotiate And HonorPerformance Agreements With Customer Segments

C-3 Ensure SeamlessLogistics Support During Customer’sTransition From Peace

To War

Focus, Manage, AndMeasure Logistics

Support By CustomerSegment Based On

Customer Requirements

LG-3 Provide

A Quality Work Environment Consistent With DLA’s Values

March 10, 2003MissionRight Item, Right Time, RightPlace, Right Price Every Time…

INNOVATE

DLA will maintain andSupport a customer-focusedlogistics team

IP-2 Implement RevisedBusiness Processes

Performance-based dominanceOPERATE

-

IP-3 Implement StrategicMaterial Sourcing

F-1 Resource DLA’s

Operational Strategies

-

Trusted financial steward

IP-1

Implement Perfect Order Fulfillment

F-3Promote Confidence In DLA’s

Financial Stewardship

F-2Minimize Total Supply

Chain Costs

C-1

CreateAnd Manage A

Customer-Focused Culture

LG-2

Deliver The Proper Knowledge And Skills

To Meet DLA’s CommitmentsTo Our Customers

LG-1

DLA BSC Strategy Map

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Strategic Management SystemStructure and Execution Discipline Required

Strategic Plan

End state, vision, goals and objectives

Transformational activities and metrics

Operations, near term actions, milestones and

metrics

Balanced Score Card

Business Plan

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Warfighting

Innovation & Learning

Resources

Adapting Our Scorecard

Force ManagementRisk

Operational Risk

Future ChallengesRisk Institutional Risk

FinancialManagement

Logistics Process

DoDScorecard AT&L

Scorecard

DLA Scorecard

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• Gained Senior Leadership Buy-In

• Formed BSC Senior Steering Group--Corporate Level

• Senior Leaders Workshops...Training On Concept Development

• Concurrent Development of DLA BSC Strategies, Measures, And Initiatives

• Developed Draft Scorecard Then Cascaded To Field

• Formed BSC Executive Board To Provide Continued Oversight

• Quarterly Review & Analysis With Corporate Board

What We Learned & Share

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Results• Improving Support To The Warfighter

– 7.8 % Reduction In Backorders and Improved Readiness

– 51% Decrease in Cost Recovery Rate . . .Lowest In History

– $2.4B Savings Returned To The Warfighter– Lowest Net Savings (DWCF) FY 04-09: $1.7B

• Sales Increased 24 Percent (20.7B) Over FY ---Combatants Choose DLA

• Overall End Strength Target 15% Below Defense Planning Guidance (Smallest Workforce since 1963)

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DISA Alliance Taught Us. . .

• Sharing “Lessons-Learned” Helps Us Pause & Take Stock of Where We Are/Where We’re Going (Refocuses Us)

• Shared Contracting Experiences Save Time and $s (references, SOWs, cost analysis, etc.)

• More About the Value of Trust and Confidence Among Professionals of Both Organizations

• Equity Built in Professional Respect Outside the Agency Returns In Favorable Ratings (GAO, DoD, Congress,etc.) – “The Voices of Alllies are Stronger Than Our Own”

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Take Aways• Decide Upfront How BSC Will Fit w/Your Organization (It’s a culture thing!)

• Have Senior Leader Champions, Advocates, Participants

• Be Flexible and Patient

• Tie Performance To Strategies

• Affix Accountability

• Need to Institutionalize Process—Becomes Routine

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BACKUP CHARTS

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DLA Planning and PPBE Cycle

POM/BES Submit

DoDSPG

DecNovOctSepAugJulJunMayAprMarFebJan

2004

DecNovOctSepAugJulJunMayAprMarFebJan

2005

POM/BES Submit

DoDSPG

DecNovOctSepAugJulJunMayAprMarFebJan

2006

NewAdministration

DLA Plan08-13

Based on MID 913, DLA PPBE Schedule

ObjectivesProgress

R&A

ObjectivesProgress

R&A

ObjectivesProgress

R&AOptional Plan

UpdateQDR

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Building Your BSC

• Top Management Support Is Critical

• Early Training

• Strategy Meetings Produce Important Discoveries

• Performance Reporting Culture Is Essential

• Fancy Software Nice—PowerPoint & Excel Work

• Top Level Card Completed Before Cascading

• Does Not Have To Be Perfect—Refine As You Go.

• Just Do It…It Takes A Long Time…It Is A Significant Culture Change